The two firms had been granted licences for equity investments, the China Securities Regulatory Commission said yesterday.

'That's good news, because it means that more liquidity will be added to the market,' said Haitong Securities analyst Zhang Qi.

Dealers said further support came as recently listed Bank of China attracted fresh interest and from the announcement of strong interim results that belied concerns overcapacity in the economy could undercut profit margins.

Zhengzhou Yutong Coach Manufacturing led some of the biggest companies higher.

Steelmakers such as Angang New Steel slid after a report showed steel prices fell in the past three weeks.

Many property stocks rose on expectation that appreciation of the yuan would help boost such companies' bottom lines. Shanghai Industrial Development closed up 4.92 per cent. Shanghai Waigaoqiao Free Trade Zone Development gained a further 7.22 per cent after it jumped its 10 per cent daily limit on Monday.